How to Establish a Financial Entity in Panama

The first step in establishing a financial entity in Panama is to legally structure it. This involves incorporating the company under Panamanian law, choosing one of the available legal structures, such as a Corporation or a Limited Liability Company (LLC). Both options are valid for operating within the financial sector. Here's a step-by-step breakdown:

• Defining the Corporate Purpose: The company's main activity must be clearly described in the corporate bylaws.
• Articles of Incorporation: Draft and register the public deed with Panama's Public Registry.
• Shareholders' Identification: Up-to-date legal documentation of the company's shareholders and directors must be provided.

We also recommend working with legal experts to ensure full compliance with Panamanian laws. At Limitless Legal, we can help you efficiently and professionally structure your company.

One of the most critical steps to creating a financial entity in Panama is demonstrating financial solvency by meeting the minimum capital requirements set by authorities. This capital varies depending on the nature of the financial institution's operations:

• General Financial Entities: Must have a minimum share capital of USD 1 million (subject to regulatory changes).
• Internationally Licensed Institutions: May require a higher capital threshold depending on the geographical scope of their operations.

Additionally, it's vital to establish a reserve fund to strengthen the institution's resources. This reserve may be mandated by the Superintendency of Banks of Panama (SBP), the regulatory body overseeing financial sector operations.

If you plan to operate as an individual in Panama's financial sector, you will need specific authorization from the Superintendency of Banks of Panama. Key requirements include:

• Application Form: Must be completed and submitted with all required documentation.
• Identification Document: Submit a copy of your passport or national ID, as applicable.
• Criminal Background Certificate: Both local and international certificates are required to ensure a clean record.
• Proof of Financial Assets: Provide financial documentation that showcases your solvency.

This process is more suited to small or specialized financial services. For more complex operations, forming a legal entity might be a better choice.

If you choose to operate as a legal entity, you will need to fulfill a more comprehensive set of requirements, such as:

• Company Registration: Complete the necessary registration with Panama's Public Registry.
• Financial License: Apply for the issuance of a specific license from the Superintendency of Banks of Panama (SBP).
• Financial Audits: Hire certified external auditors to comply with applicable regulations.
• Anti-Money Laundering Plans: Develop and implement compliance programs in accordance with FATF (Financial Action Task Force) standards.

Legal support during this process is essential to avoid missteps and penalties. At Limitless Legal, we specialize in regulatory compliance and offer tailored guidance.

Obtaining an operating license is an essential requirement for any financial institution in Panama. This involves complying with the strict regulations established by the Superintendency of Banks, including:

• Business Plan: A detailed document describing the business model, target customers, and expected risks.
• Feasibility Study: It demonstrates the economic viability of the project.
• Certifications of Directors and Shareholders: Including the due diligence of everyone involved in the financial sector.
• Compliance Manual: It details internal policies designed to prevent money laundering and the financing of terrorism.

The Superintendency will review every aspect of your application before granting the financial license. It is important to work with a specialist to ensure that everything is in order.